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THE RACE TO CONTROL DIGITAL TV: GM/HUGHES WIN ROUND ONE
Published March 6, 1995
The current issue of BUSINESS WEEK examines the success of the satellite service DirecTV, a division of GM's Hughes Aircraft Co. More than 700,000 satellite dishes and decoder systems have been shipped since its rollout six months ago, and nearly half a million subscribers pay $30 a month for a "high-powered" signal carrying 175 channels. That is compared to the VCR, which sold fewer than 300,000 in its first year. DirecTV President Eddy Hartenstein: "This is the biggest thing since color television." It was Hughes which developed the technology for the dish and then signed RCA-Thomson to produce the dishes exclusively for one year or one million units. With Sony hitting the market with competing dishes or decoders in June -- and three more manufacturers expected by '96 -- analyst Cai Rumohr of Cowen & Co. estimates prices for startup equipment will drop roughly $100 a year over the next four years. With the early success of DirecTV, Hughes has beaten "cable-industry rivals to the punch" when its comes to the programming service. DirecTV is outselling Primestar, a competing cable-industry offering, by two-to-one. While the initial marketing target has been sports fans and "videophiles," it will take several years to see if regular TV viewers will also pay the premium. BUSINESS WEEK's Eric Schine concludes, "Eventually, cable and fiber optics may do a better job of delivering even more programming. But for now, there's no disputing that DirecTV has won the first leg of the race to digital television" (BUSINESS WEEK, 3/13).